Look at the way power & responsibility are distributed around society today and ask: can’t we do better? Welcome to ‘Question the Powerful’, a twice-monthly journal on politics & society. (For more information on Henry Tam and the Question the Powerful project, click on ‘The QTP Project’ under ‘Menu’).

Wednesday, 14 September 2011

Imagine as blood circulates through the body, a few parts that have become excessively rich in fat start to prevent sufficient blood from getting to the rest of the body. Not only has the heart got to work harder to keep the blood flowing, but as proper circulation is blocked by the fattened parts, others are deprived of the oxygen they need, and the whole body risks shutting down.

Unfortunately, that’s how the economy – at the national and global level – has been functioning. Those who become fat in wealth siphon off money for themselves and don’t put it back in the economy. And then we get dire warnings about insufficient spending to keep the economy going. Within nations, the corporate elite takes out an ever-larger proportion of the country’s wealth and leaves the rest increasingly starved of resources to make ends meet. Instead of letting workers have a fairer share of the proceeds from their labour, the rich pretends the problem can be solved by sinking people further into debt.

But debt-fuelled bubbles inevitably burst. With the majority left without money to spend – as their income has been shrunk while corporate bosses divert more of the revenue generated by shared enterprise into their own pockets – recession hits us. Plutocratic friends of the rich, through malice or sheer stupidity, proclaim the solution is to transfer even more money from the poor to the rich. Get rid of the minimum wage, they say, cut taxes for the minority who are paying themselves astronomical sums, cut public spending which has helped those with less to afford a decent life without falling into greater debt, and increase job insecurity for workers by undermining what employment rights they have left.

At the international level, deregulated financial institutions are able to move money around to satisfy those with the richest accounts. Fair trade is sacrificed for the interest of predatory trade, where the resources of the poorer countries are stripped to enhance the productive capacity and balance of payment of the rich ones. Countries accumulating wealth from the deficits of others are not placed under any obligation to act in a responsible way to sustain global economic wellbeing. Middle Eastern oil producers ignored the plight of the rest of the world in the 1970s and 1980s, but in the long term they reap the social and economic instability that comes back to haunt them. Through the 1980s and 1990s, Japan pursued a policy of wealth accumulation in relation to the rest of the world, gradually and inexorably weakening the purchasing powers of the latter, until in the 2000s, with demands dropping worldwide, it entered into the flatlining era of no growth. China and the other emerging economic powers will have to address a similar problem.

The UK and the US, instead of protecting the banking elite, and siding with global wealth hoarders, should work with other countries to establish international arrangements to promote fair trade, equitable distribution of surplus, and taxing unearned excesses to invest in the healthy functioning of our inter-connected world.

The problem of economic disorder will not go away. So long as some can persist in blocking a good circulation of wealth in society, causing vital arteries to clog up, depriving many of the share they need to lead a healthy existence, we will lurch from one economic crisis to another.

Thursday, 1 September 2011

The ‘transfer window’ for the new season of Premiership football has just closed. What a damning metaphor the once beautiful game has become for the wealthy-takes-all world beloved of plutocrats.

How does Premiership football work exactly? Last season’s results are instructive. If we rank the teams by the cost-effectiveness of the points they gained (ie the total number of points divided by their wage bill), Blackpool would have topped the league, followed by West Brom, Wolves and Birmingham. But of course Blackpool and Birmingham actually ended up being relegated under the money-can-buy-anything rules.

By the same token, the bottom three clubs for relegation last season would have been Manchester City, Chelsea and Liverpool. But these clubs stayed, spent millions more than anyone else over the summer, and are all sitting at the apex of the league. Much has been said (amongst us football fans at any rate) about the once formidable Arsenal losing their way – beaten by Liverpool, thrashed by Manchester United. But take a look at the money gap between Arsenal and the ‘top four’ (the net spend on player transfers – as of 22.00, 31 August 2011): Chelsea and Manchester United each spent over £60 million more than Arsenal; Liverpool spent £75 million more; and Manchester City spent almost £90 million more.

Success is not to be nurtured, but bought with money. Will any team other than those four with their substantially larger budgets for transfer fees and wage bills win the Premiership? Absolutely not. In the wider money-dominated society, success is also in the grip of the corporate elite. The top financiers make money for themselves out of devising money-making schemes, while others lose money and sink hopelessly into debt.

What happens to others who try to compete for investment and growth? The manufacturing industry, public healthcare, universal education, affordable housing, these all languish because they cannot make the fast and easy money the financial institutions can secure. Those with the most money write the rules: they scoop off the profit, they pass on the risks, and if things do not go their way, they just get everyone else to hand them more money (public bailout, private savings, contrived deals involving futures and derivatives).

For all the talk about the merits of a free market, with a level playing field where everyone can compete fairly on the basis of their relevant contributions – skills, innovation, organisation, commitment, responsiveness – what we get is a rigged market. The lopsided playing field favours the mega-rich who will take all titles, leaving the poor to survive if they can crawl through the eye of a needle.

But just as the football world is beginning to look at introducing rules to cut down the unfair advantages that money can buy, fiscal policies can help to bring about a fairer society overall. Encouragingly there are rich people in France, Germany, and Italy who have asked their government to tax the wealthy more so they can with their greater resources play a bigger part in meeting the challenges their countries face. Alas, in the UK, the Tories and the super rich are huddled together to talk about cutting the tax rate for those with the most, and relegating the poor to a lower level of existence.